1
INVESTOR
PRESENTATION Q1 2013
2
The information contained in this document has been provided on the basis of current
knowledge, assumptions and expectations. In the event that any information is incorrect or
any party misrepresented, Burgan Bank and its consultants cannot be held responsible for
this. Various factors could cause future results, performance or events to differ materially from
those given in this document. No obligation is undertaken to update this document or the
statements / information contained in it. The information contained in this document should by
no means be interpreted as an invitation to making any investment decision based on the
same. Our continuous advice is that every investor must rely on his/her own advisor and
resources to ensure the correctness of the information presented to him/her and then makes
his/her investment decision accordingly.
Disclaimer
3
Agenda
Conclusion
Financial Performance
Appendix
Q1 2013: Key Highlights
Economic Overview
4
Economic Overview
5
0 2 4 6 8 10 12
Turkey
MENA
China
India
Russia
Brazil
Japan
EU
United States avg 2011-2018
avg 2000-2008
Lower growth ahead, debt and
unemployment remain high….
MENAT MACRO
Global Macro: weak fundamentals, below-potential growth prospects, high debt,
unemployment level and political risk
KUWAIT MACRO
Growth: 3.6% (2013). 5-year plan execution is still lagging . The oil sector grew by 14% & the non-
oil sector at 0.9%.
Inflation expected at 4% (2013): Debt relief program for borrowers could bring about moral
hazard.
(1) Source IMF 2013 Data base.
Effective structural reforms is needed to build a dynamic and inclusive economies that generate
the vast number of jobs needed
Key components of success are promoting private-sector growth & international trade, as well as
attracting foreign direct investment inflows
-
2
4
6
8
10
12
14
2010 2011 2012 2013 2014 2015 2016 2017 2018
Unemployment rate (%)
Japan US EU MENA
-
50
100
150
200
250
300
2010 2011 2012 2013 2014 2015 2016 2017 2018
Gross public debt (% GDP)
Japan US EU MENA
Deb
t le
ve
l o
n t
he
ris
e..
(1)
Un
em
plo
ym
en
t re
ma
ins
hig
h..
(1)
Lo
we
r g
row
th p
ros
pec
ts..
(1)
MENA
MENA MENA
%
“ Low investment & credit demand levels undermining Inclusive Growth prospects in the region”
6
Q1 2013: Key Highlights
7
Revenue 9.8% 12.9%(1)|31.4%
Q1 13: Key Highlights
STRONG GROWTH IN REVENUE & UNDERLYING NET INCOME WITH
HIGH QUALITY OF EARNINGS
MAINTAINED NIM ON QOQ BASIS DESPITE CENTRAL BANK OF
KUWAIT DISCOUNT RATE CUT
CONSISTENTLY HIGH RETURN RATIOS WITH NET INCOME
REACHING KD15.6M (KD20.6M AFTER EXCLUDING KD5M
ADDITIONAL PROVISIONS)
STABLE ASSET QUALITY
WITH HEALTHY NPL RATIO & COVERAGE RATIO
ROBUST YOY GROWTH IN BALANCE SHEET
OPTIMIZING BALANCE SHEET WITH SOUND LIQUIDITY
LEVELS
Q1’12 Q1’13
NPL, net of
Collateral 2.8% 1.7%(1)|2.1%
Loan
Growth 12.1% 18.6%(1)|39.9%
Solid Business
Performance
with access &
exposure to high
growth markets
Healthy Balance
Sheet generating
resilient stream
of earnings
Asset Quality
in comfortable
levels with
effective risk
management
ROE(2) 16.6% 17.9%
NIM % 2.6% 2.5%
Deposit
Growth 18.8% 15.9%(1)|30.5%
Liquidity
Ratio 39.1% 32.5%
Coverage
ratio 145% 189%(1)|165%
(1)Excluding BBT Contribution & subdebt cost to Burgan Bank Consolidation figures.
(2)ROE adjusted for additional provisions of KD5m in Q1 2013.
NPLs / Gross
Loans 10.6% 7.8%(1)|7.4%
8
Financial Performance
9
5.0 4.5 6.4
2.9 2.3
4.0 2.5
10.8
5.0
5.0
8.5 8.9
13.7
7.3
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Net Profit | KD million(1)
Cost of Credit | KD million(1) Revenue | KD million(1)
Strong Financial and Operating Performance…
Key Indicators(1)
Burgan Bank Group Q1 12 Q1 13
Revenue Growth (YoY) 9.8% 12.9%(2)|31.4%
Operating Profit Growth (YoY) 15.4% 14.3%(2)|12.4%
Cost to Income Ratio 37.7% 36.9%(2)|46.8%
Jaws Ratio (YoY) 8.1% 2.3%(2)|(31.5%)
Loans to Cust. Deposits 79.1% 81.0%(2)|84.8%
Liquidity Ratio 39.1% 35.1%(2)|32.6%
NPL to Gross Loans 10.6% 7.8%(2)
|7.4%
NPL net of Collateral to Gross Loans 2.8% 1.7%(2)
|2.1%
ROE | ROE ex. Additional Provisions 16.6%|16.6% 13.4%|17.9%
ROTE | ROTE ex. Additional Provisions 28.1%|28.1% 21.5%|29.0%
42.6
48.1 48.2 51.2
56.0
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
(1)Figures are reported after consolidation adjustments,
(2)Excl. BBT contribution in Q1’13
(3)Liquid assets comprises of Cash & Cash eq., Treasury bills & bonds and Due from Banks & OFIs.
Note: CQGR ~ Compunded Quarterly Growth Rate
17.5
13.6 15.2
9.2
15.6
4.0 2.5
10.8
5.0 17.5 17.6 17.7
20.0 20.6
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
∆ 17.6%
Gross Loans in KD million. Additional Provisions
Additional Provisions
2,507 3,484
∆ 31.4%
10
2.6% 2.6% 2.6% 2.2%
2.5%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
(1)Q4 2012 includes KD4.6m one off consolidation gains on BBT reported in Non Interest Income.
(2)Net interest income divided by end of period interest earning assets i.e. cash, t-bills and bonds,
due from banks and OFIs, loans and advances to customers, investment securities.
…with quality earnings…
0.3%
2.5%
Due to consolidation of BBT’s balance sheet only
NIM | %(2)
Revenue mix | KD million(1)
26 29 27 24
13 14 17
15
Q1'11 Q2'11 Q3'11 Q4'11
Net Interest Income Non Interest Income
28 30 31 30 35
15 18 17 21
21
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Net Interest Income Non Interest Income
39 43 43 48 44 48 39 51 56
BB Consolidated (KD mn)
FX Income 30%
Dividend 3%
Security Gains
5%
Fees & Comm.
49%
Other Income 13%
Non-Interest Income mix | %
15
28
Q1’12
43
11
3.0
4.0
4.8
6.1
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Deposits Total Liabilities
∆ 27.4%
∆ 30.5%
2.4
3.4
4.8
6.1
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Loans & Advances Total Assets
Assets Progression | KD billion
Liabilities Progression | KD billion
CQGR 8.8%
CQGR 6.2%
CQGR 6.2%
CQGR 6.9%
…supported by solid balance sheet growth…
Loans to Customer Deposits | KD billion
2.4
2.6 2.8 3.4
3.4 3.0
3.2 3.3 3.9
4.0
79.1%
81.9%
83.6%
86.9%
84.8%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Loans Deposits Loan/Deposit Ratio
Note: CQGR ~ Compunded Quarterly Growth Rate.
∆ 27.4%
∆ 39.9%
Liquid Assets 33%
Loans & Advances
55%
Investments 5%
Others 7%
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…and effectively managed risk position
266 254 253 247 258
70 76 72 67 72 102 105 111 114 118
145% 139% 154%
171% 165%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
NPL NPL net of collateral Total provisions Coverage net of collateral
10.6%
9.4% 8.8%
7.1% 7.4%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
NPLs to Gross Loans | % NPLs net of collateral to Gross Loans
2.8% 2.8%
2.5%
1.9% 2.1%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
NPA KPIs
Indicators Q1’12 Q4’12 Q1’13
Gross Credit
Facilities 3,568 4,784 4,937
NPAs 344 267 277
NPA Ratio 9.6% 5.6% 5.6%
NPA, net of
collateral 3.6% 1.8% 1.8%
NPA Coverage, net
of collateral 137% 226% 226%
Non Performing Loans (KD million) and Coverage Ratio
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ROE(1) ROTE(1)
16.6%
12.7% 13.8% 13.4%
3.9% 2.4% 4.5%
16.6% 16.6% 16.2%
17.8%
17.9%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
28.1%
21.0% 22.4% 21.5%
6.8% 4.0% 7.5%
28.1% 27.7% 26.4%
28.6%
29.0%
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
… with solid & stable shareholder returns
(1) Quarterly ROE & ROTE are Annualized.
Additional Provisions Additional Provisions
17.5
13.6
9.2
4.0 2.5 10.8
5.0 17.5 17.6 17.7
20.0 20.6
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
2011 Quarterly Net Profits 2012 Quarterly Net Profits 2013 Quarterly Net Profits
11.8 13.5
16.1
9.2
4.6 3.5
7.9
16.4 17.0 16.1
17.1
Q1'11 Q2'11 Q3'11 Q4'11
Quarterly Net Profit | KD million
Additional Provisions
9.9%
7.9%
16.1%
12.5%
17.5
Q1’12
15.6 15.2
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Financial Performance
- By Country
15
Strong diversity of operation…
Diversification strategy is working with Good balance in Balance sheet & P&L
(1)Reported contribution excluding consolidated adjustments, with Sub Debt cost allocated to subsidiaries.
Net Profit contribution to BB Share; Q1 2013 Turkey & Tunisia Non Meaningful.
* Operating Profit contribution from Turkey in Q1 2013 Non Meaningful.
Note: BBT incurred One off Rebranding Expenses in Q1 2013.
Burgan Bank Contribution Summary Q1’13(1)
67.0%
47.3%
41.3%
57.9%
60.7%
60.8%
1.7%
18.7%
17.7%
15.4%
15.6%
14.5%
25.8%
24.7%
17.8%
7.1%
7.3%
6.4%
14.0%
11.2%
15.2%
11.3%
5.5%
8.1%
7.4%
6.5%
1.1%
4.9%
1.2%
1.8%
1.8%
0.2%
2.1%
Net Profit^
OperatingProfit*
Revenue
CustomerDeposits
CustomerLoans
Total Assets
Kuwait Jordan Algeria Turkey Iraq Tunisia
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3,433
906
299 206 139
3,927
937
412 728
318 136
Kuwait Jordan Algeria Turkey Iraq Tunisia
Q1'12 Q1'13
1,696
496
185 33 6
2,048
525
245 512
38
6
Kuwait Jordan Algeria Turkey Iraq Tunisia
Q1'12 Q1'13
2,013
597
200 163 67
2,298
613
282 445
257 73
Kuwait Jordan Algeria Turkey Iraq Tunisia
Q1'12 Q1'13
9 10
8 10
8 3 4
1 1
1 1 1
22.6 23.4
10.0 11.0
9.4
6 6
6
8
(1)
2 3
0 1
1 1
1
14.7 14.8
6.6 7.2
0.9
…with stable performance from all the
subsidiaries
Revenue | KD million Operating Profit | KD million
Net Loans | KD million Customer Deposits | KD million Total Assets | KD million
Burgan Bank group registered
stable growth across subsidiaries
despite weak economic
environment
With new business origination to
be exploit through Burgan Bank
Turkey
Kuwait
Q1’13
Jordan Algeria Turkey Iraq Tunisia
Q1’12
Kuwait
Q1’13
Jordan Algeria Turkey Iraq Tunisia
Q1’12
Sub Debt Cost. Sub Debt Cost.
Note: BBT incurred One off Rebranding Expenses in Q1 2013
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Conclusion
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… In Summary
Resilient
Business
Model
Stable Risk
Position
“CONSISTENT STORY LINE SUPPORTED BY STRONG
UNDERLYING PERFORMANCE”
SOLID OPERATING PERFORMANCE
CONSISTENT UNDERLYING RETURNS & NET PROFITS
STABLE ASSET QUALITY & COVERAGE RATIO
WITH LIQUIDITY AT COMFORTABLE LEVELS
International
Operations
NEW BUSINESS ORIGINATION CAPABILITIES & ACCESS TO NEW
MARKET/CLIENTS
DIVERSIFICATION STRATEGY PAYING OFF; WITH INTERNATIONAL
CONTRIBUTING 39.2% IN TOTAL ASSETS & 58.7% IN REVENUES
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Thank You
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Appendix
21
Performance vs. Peers
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(3.5%) (37.9%)
7.7%
133.7%
(10.9%)
3.8% 28.5%
0.4%
NBK ABK GBK CBK Burgan
17.6%
21.0%
5.6% 7.3%
0.6%
29.0%
(1.1%) (8.8%) (11.6%)
8.1%
12.9%
11.2%
18.5%
10.1%
NBK ABK GBK CBK Burgan
31.4%
16.3%
(8.0%)
1.6% 1.1% 15.9%
20.6% 14.6%
NBK ABK GBK CBK Burgan
36.9%
30.5%
….. Local Peers (Q1'13 Vs. Q1'12)
5.0%
(0.4%)
3.8% 0.6%
18.6% 15.9%
21.3% 21.0%
39.9%
NBK ABK GBK CBK Burgan
27.2% 22.7%
26.4% 30.1%
32.5% 27.7%
35.1%
NBK ABK GBK CBK Burgan
(0.5%)
(2.6%)
(1)Liquid assets comprises of Cash & Cash eq., Treasury bills & bonds and Due from Banks & OFIs.
(2)Burgan Bank Q1 2013 adjusted for additional provisions of KD5m.
Net Profit Growth Q1'13(2) vs. Q1'12
Liquidity Ratio(1) Net Loans Growth Q1'13 vs. Q1'12 Deposits Growth Q1'13 vs. Q1'12
Revenue Growth Q1'13 vs. Q1'12 ROTE(2)
81.3 7.1 7.9 0.8 20.6(2)
Q1 2013 KD million.
Impact of Boubyan Bank(Islamic) Consolidation on NBK. Impact of Burgan Bank Turkey Consolidation on Burgan Bank. Impact on Burgan Bank Q1 2013 Net Profit after excluding KD5m additional provisions.
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(3.5%)
2.3%
12.2%
7.3% 6.7%
(8.7%) (10.9%)
3.9%
28.5%
0.4%
17.6%
NBK Blom AUB CBQ QNB AUDI BB
21.0%
17.5% 19.8%
14.2%
19.6%
14.8%
29.0%
NBK Blom AUB CBQ QNB AUDI BB
….. Regional Peers (Q1’13 Vs. Q1’12)
Net Profit Growth Q1'13(2) vs. Q1'12
Liquidity Ratio(1)
27.2%
32.5%
(0.5%)
(2.6%)
27.7%
35.6%
26.2%
18.7%
14.0%
30.5%
35.1%
NBK Blom AUB CBQ QNB AUDI BB
5.0% 0.5% 2.0%
21.8%
28.7% 30.7%
18.6% 15.9%
21.3%
21.0%
39.9%
Column5 Column2 Column3 Column6 Column7 Column8 Column9
Net Loans Growth Q1'13 vs. Q1'12 Deposits Growth Q1'13 vs. Q1'12
16.3% 0.0%
19.3% 22.0%
28.2%
17.8%
15.9%
20.6% 14.6%
36.9%
30.5%
NBK Blom AUB CBQ QNB Audi BB
(1.1%) (5.1%)
11.2% 10.7%
4.5%
(4.4%)
12.9%
11.2%
18.5%
10.1%
31.4%
NBK Blom AUB CBQ QNB AUDI BB
Revenue Growth Q1'13 vs. Q1'12 ROTE(2)
(1)Liquid assets comprises of Cash & Cash eq., Treasury bills & bonds and Due from Banks & OFIs.
(2)Burgan Bank Q1 2013 adjusted for additional provisions of KD5m.
Note: Banque Saudi Fransi Q1 2013 filing were unavailable.
Impact of Boubyan Bank(Islamic) Consolidation on NBK. Impact of Burgan Bank Turkey Consolidation on Burgan Bank. Impact on Burgan Bank Q1 2013 Net Profit after excluding KD5m additional provisions.
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